Asian markets fell Monday as U.S. lawmakers’ failure to reach a weekend deal to increase the nation’s debt ceiling heightened investor worries about a default.
Mainland Chinese shares tumbled on lingering worries about the nation's economic growth outlook, with railway stocks hit especially hard after a high-speed rail system accident over the weekend.
Shares of China Railway Erju Co. dropped 5.1% and China Railway Tielong Container Logistics Co. tumbled 8.6% in Shanghai, shares of China Railway Construction Group Co. and China Railway Group Ltd. each sank 6.7% in Hong Kong, in addition to losing 5.9% and 5.7%, respectively, in Shanghai.
China’s Shanghai Composite Index dropped by 2.96% for its worst one-day percentage loss since January, after Saturday’s collision of two high-speed railway trains. At least 35 people were estimated killed in the pile-up, according to reports.
Airline stocks rose in Hong Kong, meanwhile, on hopes for a brighter outlook for air travel.
Air China Ltd. AIRYY +3.88% +3.59% added 3.6%, and China Southern Airlines Co. gained 3.4%.
European stocks slid, snapping a four-day rally, after President Barack Obama and Congress failed to reach a deal to raise the U.S. debt limit, increasing concern that the world’s largest economy may default.
Banks declined across Europe after Moody’s Investors Service downgraded Greece’s sovereign-credit rating. Banca Popolare di Milano Scrl and Intesa Sanpaolo SpA both tumbled more than 8 percent. Ryanair Holdings Plc slid 1.8 percent after Europe’s biggest discount airline reported first-quarter earnings that missed estimates.
Popolare di Milano, which was downgraded today to “underweight” at JPMorgan Chase & Co., slumped 8.3 percent to 1.54 euros and Intesa Sanpaolo slumped 8.3 percent to 1.61 euros, the bank’s biggest drop in two years. UniCredit SpA, Italy’s biggest lender, tumbled 7.1 percent to 1.23 euros. France’s BNP Paribas SA sank 4.3 percent to 46.70 euros.
Lloyds Banking Group Plc also retreated, falling 4.3 percent to 45.1 pence in London. The Sunday Telegraph said the lender is considering an initial public offering for the 632 bank branches it wants to sell after getting only two formal bids. The newspaper didn’t cite anyone.
Bank of Ireland rallied 1 percent to 10.2 euro cents after Finance Minister Michael Noonan said the state agreed to sell a stake in the Dublin-based lender to fewer than 10 unnamed institutional investors. The private sector will hold a minimum of 68 percent in the bank following the share sale this week.
Fiat Industrial SpA rallied 5.4 percent to 9.47 euros after the truck and tractor unit spun off from Fiat SpA in January raised its 2011 forecast for earnings before interest, taxes and one-off gains or costs to more than 1.5 billion euros.
The stock market started the week in the red Monday, but losses were not nearly as devastating as some expected, after lawmakers failed to agree on a debt ceiling deal over the weekend.
The U.S. government is just eight days away from a possible default. But instead of selling off stocks in a panic Monday, investors mostly sat on their hands watching Congress haggle.
Travelers Companies (TRV), Boeing (BA) and Procter & Gamble (PG) were the biggest drags on the Dow, while Microsoft (MSFT) and Hewlett-Packard (HPQ) were among the handful of gainers.
Meanwhile, credit rating agency Moody's downgraded Greece yet again, saying the European bailout package put together last week increases risk for the country's creditors.
Companies: Shares of BlackBerry maker Research in Motion (RIMM) fell 4.4%, after the company announced it was laying off 2,000 employees -- 11% of its workforce.
ETrade (ETFC)'s stock jumped 5.4% on talk that TDAmeritrade (AMTD) may consider a bid for the online brokerage. Late Friday, Etrade retained Morgan Stanley (MS) to look at strategic alternatives.
Netflix (NFLX) shares tanked 7.6% after the bell, when the video rental company reported quarterly revenue of $788.6 million, falling short of analysts' estimates for $791.5 million. The company also reported a profit of $1.26 per share, beating forecasts for $1.12 a share.
The company spent much of its earnings release discussing the recent price hike that spurred thousands of online complaints.
Chipmaker Texas Instruments (TXN) is also expected to report earnings after the bell, with analysts expecting earnings of 53 cents per share.
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